The salient feature of a compilation engagement is that in such types of engagements, the accountant uses accounting expertise as against auditing expertise to collect, classify and summarise financial information. Ordinarily, a compilation engagement involves reducing data to a manageable and understandable form and does not require the accountant to test the assertions underlying the concerned information. Moreover, the procedures adopted by the accountant in carrying out a compilation engagement do not enable him to express any assurance or opinion on that financial information. The AAS deals extensively with significant issues such as the objective of a compilation engagement, basic principles in a compilation engagement, including the ethical requirements, responsibility of the management, the essential ingredients of the terms of a compilation engagement, planning, documentation and procedural aspects of a compilation engagement. The AAS also deals with the special considerations in case of clients having an identified financial reporting framework, clients having no financial reporting framework and situations of non compliance with the accounting standards by the client, estimates made by the client. The AAS also provides detailed guidance as to the reporting aspects in a compilation engagement. The AAS also contains an illustrative engagement letter for compilation engagements and also sample compilation reports covering different situations for the benefit of the members.

Issued in February, 2004
Published in the April, 2004 issue of the Journal.
Not available as a separate publication of the Institute